Companies House Filing Changes

From 1st April 2027, all companies will have to file their annual accounts using software. New reporting requirements will also be introduced. This is yet another financial blow to business owners, following the announcement of plans to close both Companies House and HMRC’s free filing services earlier this year.

What Changes are Coming?

All companies will be required to submit their annual accounts using commercial software (such as Xero and Capium). As such, both the web and paper-based filing systems used by Companies House will be closed. Whether you submit your accounts yourself, or through an accountant, you must use accounting software from 1st April 2027.

Furthermore, profit and loss accounts will become mandatory for small and micro-entity companies from this date. Previously, an exemption was in place that allowed the smallest businesses to submit simplified accounts (known as abridged accounts) where the main document was the balance sheet, rather than the profit and loss. The removal of abridged accounts will lead to further preparation time, costing these businesses more to submit their accounts.

It is important to note that no changes are currently planned to change the services for confirmation submissions and director information updates. However, directors and people with significant control (PSCs) are now required to verify their identity with Companies House.

Why are these Changes Happening?

These filing changes are being introduced as part of the Economic Crime and Corporate Transparency Act 2023. The use of software is intended to reduce errors and formatting issues, as they will be prepared to government specifications. Online filing is also more secure than paper filing as there is less risk of accounts being tampered with or being lost in the post.

Having profit and loss information available for all companies on the Companies House register is believed to improve access to credit for small businesses and micro-entities, as this will be available for lenders to assess. It is also expected to prevent money laundering as these businesses will have to disclose more information.

What do I Need to Do Before the Changes Take Place?

Before these changes occur, you will need to select the accounting software you wish to use going forward. There are many options to choose from so it can feel quite overwhelming. GOV.UK offer a tool to help you find software that works best for the type of accounts you need to submit. The software will be able to generate reports, which include the profit and loss if you have not had to create one yourself before.

Are There Any Further Changes Planned?

Companies House are planning to implement further changes after April 2027 but have not announced any details yet. You can follow our blog to keep up to date with future updates.

I’m Worried About the Changes – Can You Help?

At WKM, we understand that changes to filing can be stressful, particularly for small businesses. If you are unsure about using software for your accounts, please do not hesitate to contact us for advice. You can also find further information about software and cloud accounting on our website.

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Double Cab Pickups – Benefit In Kind Changes

Update – Government U-Turn

On 19th February 2024, 1 week after the classification criteria was updated, HMRC announced a full U-turn on the treatment of double cab pickups. It has been decided that they will now continue to use the payload system to classify vehicles, as explained in our “How Were Double Cab Pickups Treated Previously?” section. This has occurred due to push back from the motor industry over the significant increase in tax the change would have caused for most double cab pickup owners.

 

Changes to the tax treatment of double cab pickups have recently been announced by the government. This will change how benefit-in-kind tax is calculated for these vehicles if owned by your company. These changes will be introduced to remove a loophole which allowed them to be accounted for as vans rather than company cars. The tax paid on vans is usually lower than the tax paid on cars.

How Will Double Cab Pickups be Accounted for?

For vehicles ordered on or after 1st July 2024, new criteria will dictate that almost all double cab pickups will be classed as cars. This is due to the new legislation used to determine how a vehicle should be classified.

 If a vehicle’s primary suitability is construction, it will be classed as a van. This means that the vehicle must only be used for transporting goods. As double cab pickups can transport both goods and passengers, they cannot be classed as vans and must be treated as cars.

Vehicles that are already on fleet or have been ordered prior to 1st July will be treated as they were until 5th April 2028.

How Were Double Cab Pickups Treated Previously?

The old criteria that were used to decide whether a vehicle was a car or van was dependent on payload. A vehicles payload is usually given in the manufacturer’s manual and is equal to the gross weight minus the unoccupied kerb weight.

Vehicles with a payload under 1 tonne would be classed as cars, whilst those which are 1 tonne or over would be classed as vans.

Double cab pickups are much heavier than standard cars; they would almost always meet the old van criteria.

Will All Double Cab Pickups be Classed as Cars?

Not necessarily. Within the legislation, the government have included exceptions which could allow double cab pickups to be classed as vans. This is dependent on whether modifications have been made to the vehicle.

The modifications must be “sufficiently permanent & substantial in scale”. Examples provided include replacement of the rear side windows (either with metal panels or fibreglass) or welding a new load base.

Defining whether a modification can fit the criteria can be difficult. For example, removal of the rear seats of a double cab pickup would only be classed as substantial if all the related fittings are also removed. The easiest way to check that the modification is substantial is if it could be easily reversed. If so, the changes cannot be used to justify the van classification.

How does the Benefit in Kind Differ?

A benefit in kind (BIK) is defined as goods and services received by employees or directors from a company which are not included in their salary, for example a company vehicle. The method of taxing these BIKs is dependent on the type of vehicle they are classed as.

Vans use a flat rate to calculate the tax owed. On the other hand, the tax owed on cars is dependent on the CO2 emissions and list price of the vehicle. Please see our Vehicle Benefit In Kind Breakdown for more information on how it is calculated.

Example

The tax owed by a basic rate (20%) taxpayer on a petrol-powered double cab pickup with a list price of £20,000 and CO2 emissions of 170 g/km would be calculated as follows if it was classed as a car:

BIK% = 37%

BIK Tax = 20000*37%*20% = £1,480

Fuel Benefit Tax = 27800*37%*20% = £2057.20

Total tax owed = £3,537.20.

The calculation for the same vehicle if classed as a van is as follows:

BIK Tax = 3960*20% = £792

Fuel Benefit Tax = £757*20% = £151.40

Total tax owed = £943.40

You would have to pay £2,593.80 more if the vehicle was classed as a car. As double cab pickups tend to have both high list prices and high emissions, the tax owed will almost always be higher when classed as a car.

 

If you are unsure about how these changes could affect you, or you have any other queries about tax, please contact us

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